Training

Our (Work) Education Crisis: Send In the MOOCs

University of North Texas assistant professors Greg Jones and Scott Warren have published a study on the benefits of using 3-D environments to enhance Web-only and blended courses in Denton, Texas

(Corrects the identification of Peter McAteer in the seventh paragraph.)

In the early 1990s, the late labor economist Jacob Mincer gathered a group of journalists and scholars into a seminar room at Columbia University. Mincer wanted to talk about the role education played in widening income inequality. Among the participants was Fischer Black, a Goldman Sachs (GS) partner, legendary quant, and co-creator of the famed Black-Sholes option pricing model. The conversation revolved around what accounted for the widening earnings gap between workers with only a high school degree and college graduates. Black said nothing for a long time. Suddenly, he remarked, “Why are we talking about school so much? What you learn on the job is nine to 11 times what you learn at school. I don’t know the exact number, but that seems a reasonable estimate.”

The conversation stopped. Everyone nodded in agreement. Mincer quickly returned the discussion to the relationship between education levels and inequality. On reflection, the meeting would have been far more productive using Black’s insight as a launching point for a new discussion. People do learn a lot on the job: Think back on how much you’ve learned at work over the years, compared to college or even getting an MBA.

For the past several decades, the solution to Corporate America’s widespread lament about under-prepared and under-educated workers has been to concentrate on school reform, from kindergarten through higher education. Better schools are critical, of course. But when it comes to developing an educated workforce, it could be more fruitful to build on Fisher’s observation. How about focusing on expanding workplace training and learning in an era whose inequality keeps spiraling higher—just as worker knowledge and skills are critical investments in an intensely competitive global economy?

Companies aren’t devoting large resources to employee training, especially in a weak economy. For example, a 2011 survey of 1,083 employed and unemployed workers by Accenture (ACN), the consulting firm, found that only 21 percent said they developed additional skills via company-provided corporate training during the previous five years. Corporate spending on training rose by 9.5 percent in 2011, according to a survey of some 600 companies by Bersin & Associates, an Oakland-based consulting firm. The gain follows a slight 2 percent gain in 2010 and a drop of 11 percent in each of the preceding two years. “In short, a huge part of the so-called skills gap actually springs from the weak employer efforts to promote international training for their current employees or future hires,” writes Peter Capelli, director of Wharton’s Center for Human Resources in Why Good People Can’t Get Jobs.

Enter the “MOOCs.” MOOC isn’t shorthand for a new computer programming language. It stands for “massively open online courses.” The free online classes are taught by entrepreneurial enterprises with such names as EdX, Coursera, and Udacity. What is striking about the MOOCs is that they involve some of the nation’s most prestigious universities and their star professors. For instance, venture capital-backed Coursera was started by two Stanford University computer science professors, Daphne Koller and Andrew Ng. Coursera offers free online courses from top-tier universities such as Duke and Rice. Udacity was founded by three Stanford University roboticists after more than 160,000 students worldwide signed up online for their Stanford class, Introduction to Artificial Intelligence. EdX is an e-learning partnership among Harvard, MIT, and the University of California, Berkeley.

MOOCs are generating a great deal of excitement in higher education circles. With their free curricula from top-drawer professors, they offer the prospect of dramatically lowering the cost of delivering a high-quality undergraduate education, perhaps even to millions of students worldwide. Less appreciated is how the MOOCs could also change employee skill development and lifelong learning at work. “It will be transformational,” says Josh Bersin, chief executive officer of his eponymous consulting firm. Adds Pat Galagan, editor-at-large for the American Society for Training & Development: “The possibilities seem tremendous, just thinking about it and what I know about the industry.“

The timing is auspicious. For one thing, companies have embraced online learning more than colleges and universities. The phrase e-learning for companies was coined in the late 1990s. Much of the online course offerings are extensive—and boring. MOOCs are working at making their courses intriguing enough to attract students. Advances in the underlying architecture of information technologies have also vastly improved the delivery of Internet-based learning. “The technology wasn’t reliable enough a decade ago,” says Peter McAteer, former chief executive officer of CorpU, a global training company based in Harrisburg, PA. “It has now come of age and it allows for a variety of price points.”

For another, companies are moving away from the notion that employees will stay on the job for their work life. Instead, management is embracing the idea that it should offer employees better opportunities to manage their careers.

Most important, MOOCs could help solve the accreditation problem. A big issue for employees with company-sponsored learning is whether the certificate of training carries weight with other employers. Does a certificate of completion in a training program earned at a Florida company boost job hunting prospects in California and Minnesota? Well, it should if workers gain skills on the job through a corporate-sponsored, MOOC-inspired learning program that comes with a certificate stamped with the approval of a brand-name educational institution. “A hot topic is when do we start seeing certification from a MOOC,” says Walter Shill, global senior director for Accenture’s management consulting practice. “I haven’t seen one on a resume, but it’s coming.”

Take Empowered Careers. The Los Gatos (Calif.)-based company was started by Steve Poizner, a Silicon Valley serial entrepreneur. The target audience for the venture capital-backed company is aging boomers who are confronting the need to shift careers or enhance existing skills. Empowered has identified a number of fields with good prospects for older workers and entrepreneurs, such as health-care management, college counseling, and corporate sustainability. The 10-week courses are delivered on an iPad and the curriculum and certification comes from UCLA Extension, a well-known university brand. Desire2Learn, a Canadian education-technology company that creates cloud-based learning platforms, recently raised $80 million in venture funding.”I wouldn’t be surprised if we see 10 companies or so in a year, offering MOOC -like courses to corporations,” says Bersin.

Some companies may start offering their own MOOC courses as a recruiting tool, especially in knowledge-based business such as technology. The trick will be preventing fraud. But assuming the creation of systems to block cheating, what’s to prevent larger high-tech companies from developing their own free curriculum and then offering jobs to the top 10 percent of the class? “I could see this becoming in technology a huge recruiting tool,” says Shill. “It would make recruiting on a larger scale much more efficient and it can be done globally.”

Look at any economic study on the future of the American corporation and you’ll find one clear message: Companies need educated workers. The business model of low-cost, high-quality education offered by the MOOCs could well transform corporate training and turn the idea of lifelong learning into reality. Let the revolution begin.

Farrell is contributing economics editor for Bloomberg Businessweek. You can also hear him on American Public Media's nationally syndicated finance program, Marketplace Money, as well as on public radio's business program Marketplace.